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Event brought together wide array of experts from across government, academia, and industry
Washington, D.C. – February 14, 2024 (nar.realtor) The National Association of Realtors® hosted a policy forum Thursday at the Mayflower Hotel in Washington, D.C. entitled American Dream Deferred: How Can We Keep Homeownership Within Reach? The discussions brought together housing and economic experts, policymakers, and industry stakeholders to address the challenges hindering homeownership.
The event featured keynote speaker Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals (NAHREP). Acosta outlined the optimism and challenges in today’s housing industry. He spoke about his firsthand experience seeing homeownership’s impact on families and communities. “We knew that children of homeowners do a little bit better in school and have fewer behavioral issues,” Acosta said. But more importantly, he emphasized, “We knew that homeownership was the gateway to the middle class here in America.”
Acosta outlined an NAHREP-produced report on Hispanic homeownership in the U.S. “Our report has shown that the Hispanic homeownership rate has increased for nine years. It’s the only ethnic demographic in the country with nine consecutive years of homeownership gains. The Urban Institute reported that 70% of net new homeowners in the country over the next 20 years will be Hispanic,” Acosta said.
He explained that 70% is not guaranteed due to economic headwinds. “The lack of inventory in the marketplace has driven prices up and made affordability more difficult than it’s probably ever been in the history of this country,” he said.
Acosta concluded his speech by addressing the challenges the real estate industry and NAR are facing. His closing statement highlighted the hardships all first-time home buyers face and the negative repercussions that inaction on these issues will ultimately have on our economy.
Senator Todd Young of Indiana joined NAR Chief Advocacy Officer Shannon McGahn to discuss legislative solutions to affordability constraints.
“It’s a big deal. I understand you see the inflation numbers going down, but rents, mortgage rates, and prices are high, and housing stock is still down,” said Senator Young. “It’s creating not just hardship for rank-and-file families but employers as well. This is a massive constraint on our economy. It’s a constraint on matching the value people have acquired – from an economic standpoint – with companies or employers where they can deploy that value. And therefore, it’s even a constraint on our broader economic growth.”
Senator Young spoke about two bills he is an original co-sponsor – the Neighborhood Homes Investment Act (NHIA) and the Affordable Housing Credit Improvement Act. He shared his growing optimism about passing the NHIA, which could help address the historic shortage of affordable homes for both renters and home buyers. He also talked about his efforts to build bipartisan support for the Affordable Housing Credit Improvement Act, saying, “We anticipate creating 1.9 million new units on account of this legislation.”
The first panel discussion focused on solutions to grow housing inventory. It was moderated by Susan Wachter, a professor at the University of Pennsylvania, joined by JP Delmore, assistant vice president at the National Association of Home Builders; Doug Austin, with AVRP Studios and Yes in God’s Backyard; and Dave Snyder of the American Property Casualty Insurance Association.
Delmore opened the conversation by reiterating how the Neighborhood Homes Investment Act can lower barriers to new construction. “It is one approach to attempt to solve some of the financing problems that are out there. It is a bill that has a tremendous amount of bipartisan support.”
He noted that 70% of U.S. housing is completed by builders who qualify as small businesses. “So, looking at housing development and potential tax incentives, it has to be something that’s also accessible to a small business that may have five employees,” he said.
Snyder laid out the troubling cycle occurring in property insurance, which has created an additional challenge to developing more inventory. “One of the most striking data points is that from 1980 to 2021, we had reached about seven or eight natural catastrophes that caused $1 billion in losses. In 2022, it was eighteen $1 billion losses, and in 2023, just in the first several quarters, there were twenty-four $1 billion natural catastrophe losses.”
Turning to local solutions, Austin shared about his “Yes in God’s Backyard” project, explaining, “There’s about 4,600 acres of housing available in San Diego that faith-based organizations control. These people are likely to have a heart for others, and we wanted to create a way to help them provide housing on that land.”
Delmore added more legislative solutions, specifically governments speeding up zoning and the approval process. “About 25% of the cost of a new single-family house is due to regulation, and on the multifamily side, it’s nearly 41%,” stated Delmore. “That’s where the bills like what was mentioned earlier – the bill that Senator Todd Young has put forward – come in to encourage local governments to really look at zoning and land use policies.”
The second panel on solutions to assist first-time home buyers was moderated by NAR Vice President of Policy Advocacy Bryan Greene, with Katrina Jones, Fannie Mae’s vice president of equity and impact; Michael Calhoun, Center for Responsible Lending; George Fatheree, “Bruce’s Beach” attorney and ORO Impact founder; and David Berenbaum, deputy assistant secretary for housing counseling at the Department of Housing and Urban Development.
Jones shared how Fannie Mae is working to make credit less of a barrier to homeownership. “We’re enabling our multifamily property owners to report on-time rent payments to the credit bureaus,” she said. “We’re now enabling access to this tool for landlords and tenants and, as of last year, about 30,000 individuals were able to establish credit that didn’t have credit before.”
Calhoun pointed out that student loan debt has burdened first-time home buyers nationwide. “We found that student debt, particularly for Black families, was one of the top obstacles to homeownership and was disqualifying the majority of the Black applicants we were seeing.” He highlighted a Biden administration income-driven repayment program that helps reduce payments for borrowers.
Greene asked Berenbaum about housing counseling and the racial dimension behind it. “The majority of the 1.3 million consumers we counseled across the nation are folks of color, whether African American, Asian American, Latino, and other groups,” Berenbaum said.
“We, in fact, provide fair housing education in all of those sessions,” he continued. “But with innovation, we also have to be guarded because some of the predatory practices of the past can reemerge. And that’s where housing counseling and your role as professionals in the real estate community are critically important.”
Greene agreed. “The housing counselors and the Realtors® need to be connected at the hip on these issues,” he said.
Fatheree shared the story of the Bruce family, who purchased land in Manhattan Beach, Calif., in 1920 and created a seaside resort called Bruce’s Lodge, which welcomed Black beachgoers with open arms. Many white surrounding residents responded with hostility and racism, forcing the Bruces to shut down their business. The state then seized the property through eminent domain to construct a park. Fatheree helped the family reclaim the land that was rightfully theirs.
“You had a series of actors who all saw this and said this is not right,” said Fatheree. “And that’s what makes me especially excited to present and to share these stories with the folks in this room. We are on the front lines of implementing the changes that we need to see. And so, my invitation to all of us is to not sit on the sidelines. When we hear these stories, and we see evidence of something that we know just ain’t right, that we decide that we’re going to stand up and take action.”
The final discussion featured Matthew Yglesias of the Slow Boring blog, and Jenny Schuetz, a senior fellow at the Brookings Institution. Schuetz bluntly set the landscape, saying, “We’re a decade in the hole, and in some places like California, New York, and Boston, it’s more like three to four decades in the hole.” She also noted the heavy burden of localism and the limited ability to build more housing. “We are concerned about the immediate neighbors, rather than the whole city,” she explained. “We need to think about the whole economy; do workers have enough places to live?”
They also questioned whether housing can stay a bipartisan issue. “Congress has held three hearings in the last six months about inventory specifically,” said Schuetz. “I am hopeful that Congress continues to stay bipartisan on the issue of housing – something that truly affects every person in this country.”
The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Code of Ethics.
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Overall, investor home purchases dropped 11% from a year earlier, the smallest decline since they began falling in 2022
Seattle, WA – February 14, 2024 (BUSINESS WIRE) (NASDAQ: RDFN) Real estate investors bought 26.1% of low-priced U.S. homes that sold in the fourth quarter, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the highest share on record and is up from 24% a year earlier. By comparison, investors purchased 13.6% of mid-priced homes that sold (vs 14.3% a year earlier) and 15.9% of high-priced homes that sold (vs 15.4% a year earlier).
Investors are drawn to affordable homes for the same reason as other homebuyers: They cost less, which is especially attractive when home prices and borrowing costs remain elevated. And when housing affordability is this strained, there could be more potential for value increases in the lower price tier, meaning more potential for building equity.
For its analysis, Redfin determined the three price tiers by dividing home purchases into three buckets: low-priced, mid-priced and high-priced. Low-priced homes are those that fall into the bottom tercile of local sale prices, while mid-priced are those in the middle tercile and high-priced are those in the top tercile.
Low-priced homes made up 46.5% of all investor purchases in the fourth quarter (vs 47.2% a year earlier), while mid-priced homes made up 24.6% (vs 26.4% a year earlier) and high-priced homes represented 28.8% (vs 26.5% a year earlier).
“I get tons of emails every day from investors looking for properties, but of course, they only want homes that are under market value, which are hard to come by. When they find those properties, they pile in,” said Carrie Caruthers, a Redfin Premier real estate agent in Riverside County, CA. “I’ve recently seen an uptick in foreclosures, which investors are interested in because they often sell at a discount. I just sold one foreclosed house to an investor for $400,000. It probably would’ve sold for around $500,000 if it hadn’t been a foreclosure, but the investor got a deal because foreclosure purchases come with risks.”
Overall Investor Home Purchases Dropped 11% in the Fourth Quarter
Investor purchases of U.S. homes fell 10.5% year over year in the fourth quarter to 46,419—the lowest fourth-quarter level since 2016. Overall U.S. home purchases posted a slightly larger decline, falling 12.2% to 251,462—the lowest fourth-quarter level since 2012.
Investor home purchases have fallen in part because high interest rates, elevated home prices and a sluggish rental market have made investing less lucrative. Some investors have shifted their money into other investments that offer good returns and lower risk, such as Treasury bonds. But Redfin agents in both California and Florida said many investors are still hungry for homes.
“There are a lot of investors out there fighting for properties,” said Juan Castro, a Redfin Premier real estate agent in Orlando, FL, which posted the third largest drop in investor purchases in the country last quarter. “There just aren’t enough properties to go around, which is putting a cap on how many homes investors can buy.”
The total supply of homes for sale in the U.S. fell 5.1% year over year in December and remained far below pre-pandemic levels as most homeowners stayed put to avoid losing the rock-bottom mortgage rate they scored during the pandemic.
The typical home purchased by investors in the fourth quarter cost $453,271, up slightly from $426,573 a year earlier, as U.S. home prices ticked up. Overall, investors bought $32.3 billion worth of U.S. homes, down just slightly from $33.6 billion a year earlier.
Investors Purchases Didn’t Fall Nearly as Fast as They Did Last Year
The 10.5% drop in investor home purchases in the fourth quarter marks the sixth straight year-over-year decline. But that pales in comparison to the 44.1% drop of a year earlier and represents the smallest decrease since investor purchases started falling in the third quarter of 2022.
The decline in investor purchases has eased as the shock of elevated mortgage rates has subsided and the U.S. economy has proven to be more resilient than many expected.
“It’s too early to say that investor purchases have hit a bottom, but they’re unlikely to shoot up like they did during the pandemic anytime soon,” said Redfin Senior Economist Sheharyar Bokhari. “That’s because borrowing costs and home prices remain high, the number of homes available to buy remains low and rents remain lackluster. If the Fed cuts interest rates later this year as expected, we may see more investors wade into the housing market.”
Investors Bought Nearly 1 of Every 5 Homes That Sold in the Fourth Quarter
Investors bought 18.5% of U.S. homes that sold in the fourth quarter, up from 18.1% a year earlier. Their market share likely rose slightly because they didn’t retreat as quickly as individual buyers.
Single-Family Homes Represented Over Two-Thirds of Investor Purchases
Single-family homes represented 68.6% of investor purchases in the fourth quarter (vs 68.8% a year earlier). Condos/co-ops made up the second largest share (19.2% vs 17.9% a year earlier), followed by townhouses (7.1% vs 8% a year earlier) and multifamily properties (5.1% vs 5.3% a year earlier).
Metro-Level Highlights: Q4 2023 Investor Activity
Where investor purchases increased/decreased most from a year earlier:
Where investors bought the highest/lowest share of homes that sold:
Where the share of homes bought by investors increased/decreased most from a year earlier:
To view the full report, including charts and additional metro-level data, please visit: https://www.redfin.com/news/investor-home-purchases-q4-2023
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country’s #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we’ve saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email press@redfin.com. To view Redfin’s press center, click here.
Redfin Journalist Services:
Angela Cherry
913-638-8249
press@redfin.com